market started to come back. we were down 340. within a second or two, we were down about 240. now we're down 270. what a day. my time is up but neil, it's yours. neil: thank you very much. we're on top of these developments. trade will dictate developments at corner of wall and broad here. these navarro comments whether they're market moving or not, they're all not that friendly. there is sentiment by a trade negotiator, he always es spoused that the administration will continue its resolve that hopefully cooler heads will prevail. we're still down 275 points. we've still got some premier issues, caterpillar and boeing and dupont and extending into the technology field with the likes of qualcomm, nvidia, ford.

deliver riff goods in this country. fewer goods to deliver like fedex, csx, you can see the spillover effect, all those issues that were down, they're still down. all the issues under pressure they're still under pressure. we have four hours to go. i don't want to leap on minute by minute moves in this market that would be a disservice to you. we're focusing on this. in the meantime we'll hear what the president says to the economy, he will talk to largely small, medium-sized independent women. this group i would not say impervious what happens on the trade front, more resistant than bigger multinational concerns that could be exposed to a trade war. that would not go well. blake burman at the white house on all these developments. reporter: neil, that will be second potential batch of headlines. the first came with the peter navarro white house trade council, in alignment with president trump on many issues including china. they will put him forward to put

the thinking on newest $200 billion in threats on potential tariffs down the line and navarro said essentially, look, we think going forward we are in a better spot than china this emerging at this tit-for-t. here is why. they say look at the numbers of the latest batch of numbers, 2017, last year china sent a little bit north of $500 billion worth of goods our way. we sent them $130 billion. that is how you get the trade deficit. navarro telling us on a conference call a little while ago the following, quote, what the president did yesterday announcing $200 billion is clear. china has much more to lose. what we have at stake is 130 billion going to china. what they have at stake, 500 billion going to us. the president could put that theory to test at some point in the near future. navarro would not say we're in a trade war. he called it a trade dispute. spokesperson for commerce

ministry in china was asked whether we are indeed a trade war and this is their response, quote, as we said before china does not want a trade war and certainly is not afraid of fighting one. if a trade war is waged against us we will definitely safeguard our legitimate and lawful rights and interests. so if you're wondering, neil, what next or really how did we get here, peter navarro told us today there was quote, no progress in the last three sets of talks. remember steve mnuchin, navarro, others went over to china. a chinese delegation came back here. navarro was largely left out of the talks. wilbur ross went over to china to secure deals. that is what navarro cited as no proggas. whether he was asked if there were future talks down the line, our phone is always open, but he added, neil, talk is cheap. neil. neil: indeed it is, and it is inconsistent. thank you very much, my friend. there is danger interpreting

market moves by the minute. nothing substantially changed here. you might get a sense from peter navarro, conservative, some say the spartan trade warmonger in the white house, that is up to interpretation that he is sounding conciliatory in those remarks. he is just saying they will maintain their resolve. so far no one is budging on the other side, china. all are prepared, response tit-for-tat. the administration as you know is already lined up about $200 billion in additional tariffs on additional chinese goods if the chinese do that. there is no indication that the chinese are not. we're monitoring this very closely with the dow down close to 300 points. nicole petallides, on what's telling right now. >> oh, yeah, we're seeing selling across the board right out of the gate this morning. what is interesting the traders see this very much as a buying opportunity. they have used this throughout the year. every time there is a big dip, they step in and buy. right now the lowest point on the dow is 419 points.

we're down 1.1% on the dow jones industrial average. and no doubt, tariff-related stocks are selling off. industrials and materials. we're looking at some names that are dragging on the dow. you know that it goes right in there, those industrials. we're seeing aerospace names, boeing, industrials like caterpillar. 3m. boeing, caterpillar, down 3 1/2% each. only here at home. those are the moves. what is happening we're seeing accelerated selling abroad particularly in china. we saw chinese stock market selling off. shanghai composite index tumbling about 4%. in fact china's benchmark is firmly in correction territory, approaching bear market territory of 20%. there is a look at shanghai composite index, when you do a comparative chart. we're up about 2%, since president trump first announced the tariffs. we are seeing the shanghai composite index down nearly 11%, thanks to charlie braid i, our senior editor, bringing this to

our attention. you can see the real divergence. which country will blink first, them or us? we'll hear from president trump this hour on "coast to coast." neil. neil: of course the president will address, large, small, medium sized businesses, not referring to their physical size, talking about the businesses they represent. they have been as i said impervious to these chinese trade wars and rough talk back and forth but that might not be for long. for example the president of the atlanta federal reserve said just recently that, you know, he is concerned that a lot of companies are holding off and he is saying this of all companies, holding off on new investment because they're uncertain right now of making new invests in this environment. this is coming from rafael bostic, the man who runs the atlanta fed. the read with david asman, market watcher, alan knuckman. david that is a interesting spin where this could go as it of

effects future investment plans, that is it what you fear with trade tiffs that don't become wars, because the better part of valor is keep your powder dry. >> things tariffs always applied to, the best example, most people don't buy washing machine, buy it every five or 10 years. but the fact is, trump administration put a 20% tariff on washing months. the price of washing machines has gone up 17% since that happened. the question, who does it benefit? i mean you look at company like whirlpool, yes, whirlpool which makes washing machines gets a benefit from the washing machines they sell but they are also steel consumers. the tariffs on steel cost them. at first their stock went up about 15, 16% when the washing machine tariffs were announced. now it has come down 18% as a result of steel tariffs costing

that company. there is a net cost, not only to the consumer but also to the companies. neil: do you think, alan, when you follow it, that some of these, you know, district fed presidents and a lot of economists by training overhandling this? in bostick's case i began the upside to the my risk profile for growth, reflecting business optimism. i will paraphrase here not so much, all because of this? >> well, we're not seeing so much in the price. we're in a bull market of uncertainty for the last year-and-a-half but we're still in a bull market. the dow and s&p are up 15% in the last 52 weeks and the nasdaq is up 25%. would you think something like this could shake the markets and it really hasn't. the last three weeks of prices we opened postively on overnight news, but fried and essentially we bounced back to near

unchanged, very modest losses. so far today we've seen that where the worst was in the overnight. people are using this as a value area to buy. what hasn't happened, we have not seen a spike in the vix or the fear. vix is at 13. we were 70% lower back then when we saw the vix explosion and people were truly fearful. neil: david, i know you follow these comments we get out of officials at the white house. sometimes we're relieved to hear they're still alive and talking to people. i think sometimes that is why we respond often postively or eases our concerns. >> yeah. neil: but nothing that i heard in peter navarro's comments have eased concerns, at least, that i had, this is going to be resolved quickly and amicably. on future talks he says, our phone lines are open, they have always been open, to which i would add, duh. characterizes this as trade

dispute. that nothing has changed today so why even make announcement? >> well there is, we have to remember there is a big split among the president's trade team. neil: absolutely. >> people like peter navarro, who is very much against complete open free trade and then you have people like larry kudlow who just suffered a heart attack last week. so he is kind of the out of commission at least for the moment. he plans to go back but who are big free traders. the free traders versus the fair traders at the white house, they have different policy prescriptions. take one example. the president suggested we have huge trade imbalance with countries like china, that is inherently bad for the economy. that is not always true. i asked larry kudlow about that. 1984 we had terrible trade i amal bans we grew at 7% in 1984. doesn't mean if you have a bad trade imbalance, you don't have a bad economy. he doesn't like the metric, using trade imbalance and

artificial number attached, it has to be a certain number in order for us to stop the tariffs. there is a big question who is actually advising the president. we have to remember as you suggested before, we only have $50 billion of tariffs so far. the suggestion of new tariffs on china are only that, they're only that, they're only suggestions. we don't know where it will end up. it could end up with $400 billion of tariffs against china, what we almost have in a trade deficit with china. that i think would scare the markets but again right now it is just talk. as we've seen there is a lot of just talk from this administration. neil: is it your sense then, alan, to david's point that it is just talk, that it remains just that, and markets find their equalibrium here? this might be initial overreaction? that the chinese might to the president's point still need us more than we need them? i mentioned that because our aforementioned charlie brady, he is our resident genius, he is are you, if you will.

anyway he was saying the shank lie composite -- shanghai composite tumbled 11% since the president first announced tariffs dating back to march 1st while our markets are up minus one or 2%. we're absorbing this a heck of a lot better than they are are. what do you make about that? >> you are right on your point that nothing changed with navarro's comments today but nothing has changed actually in the big picture either. there is a lot of talk and discussion and these are proposals as it stands right now and most people are confident they will be worked through somehow. the one thing we don't discuss is that we talk about the goods trades deficit. we're a services economy. neil: right. >> that is a great point. >> we have a service surplus with china. until they start hurting us that way i don't think that's, you know, i think rest of this can be ironed out but i have confidence in the markets. again we were within striking distance of the all-time highs in the s&p, closing in on that 2800 level once again with new

highs in major markets. i think momentum remains strong. earnings starting out after 4th of july. this is a bit of a pause after the end of earnings season. people are finding some woes, some worries. this is the latest issue to focus on. >> can i say one other thing, neil, which is, as dangerous as a trade war is, we saw what we happened during the great depression in the '30s, a trade war can kill the economy. >> i didn't see it. >> you didn't see it. i read the history books, i didn't see it either. >> all right. >> domestic imports in total as percent of the economy is only 15% of our entire economy. still a lot of money. it is $3 trillion. that is only 15% of the economy, and that 15%, the 50 billion we tacked on since the trump administration came into power is only small percentage of that to what alan is saying, put it in perspective, not affecting economy, unless you're buying a

washing machine or a steel-consuming company. those people are feeling it and eventually might boil down into the market but so far not so much. neil: here is i always thought you brought your wash out, david. >> no, i go down to the hudson river do it by hand. i save a lot of money that way. neil: i thoughtt was you. thank you very much. >> thank you. neil: there is history of sort of thing where the talk can become action and the action can make you regret you didn't talk more. you know who felt that way? ronald reagan, the gipper. how his particular war with the japanese over computer chips came back to bite him he regretted the action he took. that was then. what happens now? ♪ man: i got scar tissue there.

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neil: all right, we know of one nation that is not going tit-for-tat with us, mainly because we haven't really enacted trade impositions on the russians but they indicated right now that they are not going to impose tariffs on imports of medicine from the united states. we do have a number of sanctions and built-in g7 actions we have taken against russia.

this goes back years for the invasion of crimea. the russians say that will not affect how their policy moves forward buying medicines from the united states, for example. maybe limited to that group. i hasten to add that. this will come up when the president speaks with members of the independent business community very shortly in washington. his treasury secretary will be with him, his pretty hawkish, foreign policy and trade expert navarro is going to be there as well. i should stress beyond this, that we're expecting this that the president this is going to be ultimately good for everybody. that we'll be fighting through this but it will be good for the u.s. economy t will be a unfunny way to see this. sometimes things get out of control. former reagan chief economist, art laffer with us, right now. i was remembering knowing you were coming, it was ronald reagan, i guess much to his consternation, but was pushed into taking action

against the japanese on computer chips claimed to be floodeds dropping on this market. it didn't go as planned. i'm told the president later regretted that. can you give me the skinny on that what happened? >> you're exactly correct. he regretted doing it and put on anti-dumping on japanese steel and other items. he did regret it. he thought that was one of the mistakes he made while president. if you remember ronald reagan was also the president who developed nafta. neil: right. >> we didn't get it passed but, clinton came in right away, bang he got it passed which was wonderful. reagan was a free trader and you know, all of the discussions you guys have been having, watching the show for a while now here it is not wise, i don't think, to underestimate the damage that can happen from a trade war. just because china is suffering more than the united states does not mean we aren't suffering and it is not bad policy i mean whenever you fight, neil, you

always lose. may lose less than the guy you beat up but you always lose. it is much better to negotiate reductions in tariffs than to threaten people with higher tariffs, always. neil: i'm probably misquoting, and i won't even try, but i believe in ronald reagan's case, after the whole computer chip thing with the japanese beginning with toshiba, what have we wrought in the process we embarrassed globally a friend. >> yes, exactly. neil: not that they were trade sinners but it was limited to that particular area and there must have been a better way to handle it. >> yeah. neil: what did you make of that, and the lessons for today? >> well, that is exactly correct. if you have a problem in an industry, the problem with manufacturing in the midwest, neil, is not china, it's not europe, it is high taxes in those states that drive all their businesses to nashville, to tennessee, to alabama, to south carolina. that is what's happening. those states policies are the killers.

when you look at it we did color television protectionism. long ago and far away we did it, it destroyed our whole industry of color television. we became non-competitive. we fell behind rest of the world. protectionism doesn't work. we did it with nixon. we did it with a 10% import surcharge if you remember. we had the job development credit, excluded foreign-made capital from the tax credit. we devalued the dollar. look what happened with the stock market. it got out of control with nixon. we had the whole recession of 1974, i believe, exclusively as a result of nixon's protectionist policies. i think it might come out okay but boy, i'm worried, you have to wonder about the collateral damage even if we win how do we get everyone moving forward. >> exactly. neil: even if you give the president credit, one thing he does educate people a lot of countries rig certain things to

their advantage. >> they do. neil: it is good that he brought that to people's attention. you can question the method he is hoping to respond, when i hear and follow peter navarro and his comments in the past he just sounds crazy. >> he does. neil: it makes it very difficult to if you accede those demands, whether countries ever get back to a normal relationship. it takes a while. >> i think you're completely right, neil. you does sound crazy on these issues. he talks about winning the war on trade, which is not the way you should talk about things with friends. let me make one point here. the trade deficit is the most wonderful thing in the world. the trade deficit is the company tall surplus. you can not bring american companies back into the united states without having a huge trade deficit. you move a factory in mexico that employs hundreds and hundreds of mexicans over the border into arizona or colorado or employs hundreds and hundreds

of americans. that is a mexican export, a mexican trade surplus, a u.s. import and a u.s. trade deficit. it is accounting deal. it is not opinion. it is a trade deficit is wonderful for this country. our trade deficit under reagan went way up during the period of the greatest growth, the biggest stock market boom ever. that is the solution. they don't understand the accounting let alone the issues. it is really disturbing to me. neil: if i had to swap one or the other, i would go for economic boom and 40 million jobs but that is just me. >> i would too. thank you, neil. neil: great review of history. we always get that from you and we always appreciate it. by the way another thing getting tough for this president, the plan to bring zte back to life, the chinese telecom concern. he is running into a buzzsaw of opposition from many in his own party who want to pile on the pressure to zte, not give them a break. the read from fox business's adam shapiro. adam, what is going on?

reporter: neil, the senate made it harder but not impossible to salvage the deal the president struck with the chinese to save zte. they voted 85-10 to reinstall a ban selling parts to zte. a must pass 17 billion-dollar defense spending bill. president trump is going to lobby negotiators to strip out the reinstated zte ban. the president will meet tonight with house republicans. he is meeting wednesday with senate republicans. congress obviously worried about threats to national security posed by chinese telecom and technology companies like zte and huawei. shares of zte fell as you pointed out almost 25% during trading in hong kong. zte's shares are down 66.4% this year. well earlier this spring president trump personally negotiated a deal with chinese president xi xinping to allow

zte to resume business despite a business by the u.s. commerce department to block sales to the company. now that deal, in jeopardy, requires zte to pay a one billion dollar fine for violating sanctions by selling equipment to north korea and iran. so the president will have some lobbying to do if he is going to convince congress to strip out the ban he does not want. neil. neil: thank you my friend. adam shapiro. following all the developments of the this is a day we're down 300 points. a lot of sectors affected by big international behemoths that trade abroad, like caterpillar and boeing. you looks for trade deal to avoid a trade war better it looks for stocks today. that is not one of those days. we threaten the chinese on top of the $50 billion in tariffs we're looking at on chinese good the president is saying if the chinese think of responding in kind it is automatically going up to 200 billion if they want to go on top of that, another 200 billion.

this is where the fear cops n sometimes it becomes displaced fear. sell first, ask questions later. it is affecting caterpillar, boeing, dupont. weighing on everything from high-tech issues, apple, huge exposure in asia. go ahead man sachs has a lot of financial relationships in asia as asian-related banks but this extends to most of the key players who have anything to do with strength globally. qualcomm, nvidia. keep in mind the whole semiconductor industry if you think about it, more than half its revenues are china-centric. the thought we go into a nasty trade war with them, half their revenues gone like that. that is the fear. i think misplaced fear but that's the fear. ford which just expanded in china and elsewhere, those shares down about 2 1/2% on concerns this escalates. even shipping good here, if you have fewer imports coming in, fewer goods from abroad coming in all the companies that

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we're all business, mostly. neil: all right. waiting for the president to deliver his speech to the national federation of independent businesses. me time one of the best writers i know, thinkers i know on all these matters, "wall street journal" editorial board member dan henninger. i will go ping-pong ball all over the map. president will refer to the trade situation and i'm sure make comments about immigration stuff, on the fact he is overstepping himself and markets are nervous, he has been urging calm, we'll get through this, peter navarro much the same, what do you think? >> if there is calm we'll get

through this, trump has unbounded self-confidence. he thinks it will work out. kind of focus what he has done, which is threaten china with $200 billion of tariffs, and say if they try to follow around with this, he will impose another $200 billion. neil: he got mad because they responded 50 billion in kind. you try to do that, another 200 billion. that is start of a war. >> this isn't las vegas. we're not sitting across the table putting card down on the table this is the chinese government. the logic here china has to blink, right? they have to surrender, say basically we give up. neil: do you think that is how it end? >> no, i don't think how it end. i don't think it is neat and simple at all. the chinese are sophisticated playing politics. "the wall street journal" reported over the weekend, the prime minister of japan, shinzo abe, in light of the

relationship, the poor trading relationship he has with the united states is talking about a approachment with china. that is ex-china. talking about burying the hatchet, building up a trade relationship. if these sorts of things start happening around asia they feel they pull back from the united states, do deals with china, the chinese will be so eager to try to accommodate trump on trade. neil: could i answer as the president would? let them try. let them try. i will counter everything they do. they need us a lot more than we need them. >> he has to hope it goes well for him. i mean trump's approval rate negotiate "gallup poll," which is very kind of neutral poll just hit 45%. it is very strong now. neil: the trend has been his friend. >> it is up to 89% approval among republicans. republicans are energized. they are willing to turn out in the midterm elections. but if this goes south on him that could really create some

heavy water. add the immigration fight as well. we can't ignore that, the separation of families. trump really has a lot of big balls in the air right now. neil: one of the things that also come up, this idea that it always works out, when markets go into a freefall as was the case, they always come back. so we get scared by this. i know the white house position has always been everyone is going to act like their hair is on fire, cooler heads will prevail, buyers will be back and all of this goes away and that has been kind of the way things have been going here but we're coming to a head now on a lot of this. >> as a matter of pure, bloodless economics, neil, the economy trump has produced as a result of he deregulation in the first year, 40% cut in the corporate tax rate, is extraordinary. neil: absolutely. >> i mean there has been -- neil: i would make the argument the regulation thing really kicked it off. >> yeah. neil: bottom line those two events, whatever you think of the president, gave him a foundation that could absorb all

these body blows since. >> yeah, exactly. the job creation, the strength of capital investment, i mean what we saw was just how strong the american economy fundamentally was. we've been sitting there, kind of treading water eight years under barack obama. trump released it. we'll getting extraordinarily strong effect from the economy. the question is, how much of that can be offset by a trade war with china? a quarter of a percentage point gdp? maybe upward half a point of gdp? at some point it could start to have negative impact, people losing their jobs, showing up at town hall meetings with congressman. neil: every trump person i talk to says, crepe hanger, crepe hanger, all these, you know doom and gloomers, i'm not saying that you're that way, they have been wrong, wrong and we've been rising, rising. our poll numbers included through all the doubting and through all the doubters. >> at the margin there are going to be job losses among steel

manufacturers, aluminum, people who use aluminum and end product manufacturers. they are probably going to have their prices go up if there is a tariff imposed on those products and they're going to start laying people off. the question is, will it be enough to have any kind of political or economic effect? neil: strong economic recovery has been seeing offset any of that prior? in other words, it will take a lot for those tariffs to reverse what's been going on? >> trump economy has been such a good news story. extraordinary job creation. the fact that there are more jobs than unemployed people now. to sort of get in the middle of that, start creating a narrative people are saying, yeah, but the trade stuff is beginning to push it in the other direction, just strikes me as kind of a momentum that the president doesn't need right now but they're insistent on having it out with china. and you know, we got to be hopeful but looks like the market is extremely nervous

about the direction it's going in. neil: for today, but let me ask you though, dan, very quickly, we take a break before we go to the president, the notion he is having his wind at his back, things are picking up, absorbing any potential body blows, republicans looking good, don't worry about the immigration fallout, this will be short-lived, don't worry about the effect on chinese, canadians, their economy is sputtering, ours is gaining strength, we win, we win? >> they have to hope it is short-lived. it is june. we're getting close to october. if you have some negative stories like immigration story at the border, child separations, this will have impact on suburban districts where some republicans are getting nervous about reaction of suburban voters. if you have a trade war increasing as you get towards october, the effect on those marginal house seats could be

significant. trump really, really wants to hold on to the house of representatives or he will be facing trouble next year. neil: thank you very, very much, my friend. you are looking at the president of the united states. he is arriving to speak with the national federation of businesses. we've been touching on here the group thrived on regulation and tax cuts. this environment you will probably address. the ongoing trade tiff with china. the president realizes he has got the economic advantage. let's go to him. [applause] >> you're going to see that tonight, right? thank you very much, juanita. you have been fantastic and your kind words. this is truly an incredible organization. thanks also to the members of

nfib board of directors how spent time with. took some wonderful pictures with a good-looking group, i have to tell you, and board chairman steve schram. thank you, steve. [applause] together you have been a powerful voice for america's small businesses and now you have a true friend and ally in the white house. you know that. [cheers and applause] i'm honored to be with you today for this historic celebration. this was something when they asked me to do, i didn't think about it for more than about a second. i said i will do it. you are very special people. [applause] let me officially say on behalf of the american people, happy 75th anniversary to the national federation of independent business. i tell you, you deserve a big

happy. [applause] joining us today are some terrific people who work very, very, very hard, and actually they are starting to to get a lot of credit. in fact we had our highest poll numbers today. can you believe this? they're doing a good job, our highest. [applause] you know the old story when i was campaigning i only mention we're doing well in the polls. when we're not doing well i don't talk about it. like all of you, you do the same thing. secretary mnuchin, steve, thank you very much. doing a great job. [applause] secretary acosta, alex. [applause] administrator linda mcmahon. thank you, linda, thank you. [applause] they are fighting hard for small business and for large business. they're fighting hard for our country frankly each and every

day and they're doing a terrific job. most importantly i want to thank all of you, the small business owners who are the engine of american prosperity and you know i've been saying it for a long time but you really are. look at even the stats, you look at the numbers, look at taxes that are paid, you look at the jobs, it is all about small business. small businesses i say this to linda mcmahon all the time, head of small business but small business is really big, huh, linda? for many years washington tried to hold you back, tear you down, crushing small businesses with terrible taxes and oppressive regulation but all that changed starting in november 2016. [cheers and applause] the trump administration is with you and we are with you 100% and always will be. [applause]

instead of punishing entrepeneurship, we are now poe moating entrepreneurship -- promoting entrepreneurship. especially that guy in the corner. [applause] main street is thriving in america and we're winning once again. we're respected again. this country is respected again. [applause] before going nye further today i want to take a moment to address something you've been reading a lot about, the illegal immigration crisis on our southern border. been going on for many, many decades and many years and it has its ups and its downs and all we need is good legislation and we can have it taken care of. we have to get the democrats go ahead and work with us because, as a result of democrat-supported loopholes in our federal laws most illegal

immigrant families and minors from central america who arrive unlawfully at the border can not be detained together or removed together. only released. these are crippling loopholes that cause family separation, which we don't want. as a result of these loopholes, roughly half a million illegal immigrant family units and minors from central america have been released into the united states since 2014 at unbelievably great taxpayer expense. nobody knows how much we're paying for this monstrosity that's been created over the years. legislation that nobody has any idea what they're doing. they don't even know what it means. and you have to see this. it is a mile high. child smugglers exploit the loopholes and they gain illegal

entry into the united states, putting countless children in danger on the perilous trek to the united states. they come up through mexico. mexico does nothing for us. you hear it here. they do nothing for us. they could stop it. they have very, very, strong laws. try staying in mexico for a couple of days, see how long that lasts. okay? [laughter] [applause] they do nothing for us. and i see it through nafta. i see with the $100 billion plus, that they make on trade through nafta, one of the worst deals ever made by this country. a disaster. and we're trying to equalize it. and it is not easy but we're getting there. not easy. [applause] and we're going to take care of our american farmers and we're going to take care of our manufacturers and our

manufacturing jobs but they're making unbelievable amounts of money. and that is not including the drugs that are flowing through our border because we have no wall. and we have no protection. the drugs coming in from mexico and through the southern border is disgraceful. so we'll see whether or not we can make a reasonable nafta deal or deal doesn't have to be called nafta. we can do one-on-one with mexico. one-on-one with canada. and by the way, canada, they like to talk. they are our great neighbor. they fought world war ii with us. we appreciate it. they fought world war i with us, we appreciate it but we're protecting each other. there was a story two days ago in a major newspaper, talking about people living in canada, coming into the united states and smuggling things back into canada because the tariffs are

so massive. the tariffs to get common items back into cap -- canada are so high they have to smuggle them in. they buy shoes and wear them. they scuff them up. they make them sound old or look old. no, we're treated horribly. dairy, dairy 275% tariff. so basically that is a barrier without saying it is a barrier. and i told them, if they don't change their ways, we have a tremendous deficit. people say well, there is really not that much of a deficit, well they're not including two things, energy and timber. and those are the two big things when it comes to canada. now we have to change our ways. we can no longer be the stupid country. we want to be the smart country. [cheers and applause]

so hopefully we'll be able to work it out with canada. we have very good relationships with canada. we have for a long time. hopefully that will work out but canada is not going to take advantage of the united states any longer and mexico is not going to take advantage of the united states any longer. and when i campaigned i said that i will either renegotiate nafta or i will terminate it and start from an even base and people are afraid of that, you know. so many people come up, oh, meese don't terminate nafta. it is no good. we know what we have. it is true. people are worried because they know what they have. if you look, i love the american farmer more than anybody. they have backed me. i love the american farmer. [applause] and by the way, tell you in a

little while, it is in one of my notes, the american farmer virtually will not have to pay anymore estate tax on their farms, when they pass away, they want to leave it to their children. [applause] and that goes for almost all small businesses. you won't have the estate tax to pay anymore, which was crippling. that was in our bill. [cheers and applause] see a young guy is standing up. now he is too young to be leaving it, so that means he is a beneficiary. don't act too happy. there is a wealthy father there. don't act too happy. [laughter]. is that your father? oh, wow, the answer is yes. i was honored to have done it. because it was destroying the estate tax, small businesses and farms. destroying them.

people were mortgaging them to the hilt to pay the tax. then they couldn't pay the interest on the mortgage, and the banks would take them away. you don't have to pay the estate tax any longer. of. [applause] in most cases. in other words, loopholes, if your farm is really big, it's a pretty big level, you know that. pretty big farm. these loopholes have created a massive child smuggling trade. can you believe this? in this day and age, we're talking about child smuggling. we're talking about women smuggling, in this day and age. the worst it has been in history because the internet has led to this. you think back 200, 500, 1000 years ago, the worst it has ever been, women smuggling, child smuggling.

since last year, child smugglers who are very, very sophisticated, they have learned the loopholes in this horrible, rotten system, that the democrats have to help us fix because we need the votes. do we have the republican votes? we still don't have enough votes. people don't understand that. we need democrat votes to get it fixed. smugglers know rules and regulations better than people that -- there has been 325% increase in minors and 435% increase in the smuggling or attempted smuggling of families and minors into our country. we're stopping them all the time, by the thousands. they still get through but we have no wall. we have no border security. without a border, you don't have a country. you don't have a country.

[applause] under current law we have only two policy options to respond to this massive crisis. we can either release all illegal immigrants families and minors who show up at the border, from central america, or we can arrest the adults for the federal crime of illegal entry. those are the only go options. totally open borders or criminal prosecution for law breaking. and you want to be able to do that. we don't want people pouring into our country. we want them to come in through the process, through the legal system, and we want ultimately a merit-based system where people come in based on merit. [applause]

keep in mind those who apply for asylum legally at ports of entry are not prosecuted. the fake news media back there doesn't talk about that they're fake. [applause] they are helping, they are helping these smugglers and traffickers like nobody would believe. they know it. they know exactly what they're doing and it should be stopped. because what is going on is very unfair to the people of our country, and they violate the law. people the law, endanger their children in the process, and frankly they endanger all of our children. you see what happens with ms-13 where your sons and daughters are attacked violently. kids that never even heard of such a thing are being attacked

violently, not with guns but with knives because it is much more painful. inconceivable, here we are talking about business, inconceivable that we even have to talk about ms-13 and other gangs. they attack violently, the most painful way possible. and a bullet is too quick. and we're allowing these people into our country? not with me. we're taking them out by the thousands. we're taking them out by the thousands. [cheers and applause] so what i'm asking congress to do, is to give us a third option which we have been requesting since last year, the legal authority to detain and promptly remove families together as a unit. we have to be able to do this. this is the only solution to the border crisis.

we have to stop child smuggling. this is the way to do it. and ultimately we have to have a real border, not judges. thousands and thousands of judges they want to hire. who are these people? when we vet a single federal judge, it goes through a big process. everybody that is ever met her or him they come, they complain. they don't complain. they shea he is brilliant. she's brilliant. he is not smart enough to be a judge. now we're hiring thousands and thousands. what country does this? judges. i won't say it. i refuse to say it. i hope they picked that up back there. they won't. [laughter] now what, seriously what country does it? they said, sir, we would like to hire five or six thousand more judges. 5 or 6,000? can you imagine the graft that must take place. you're all small business

owners. so i know you can't imagine a thing like that, what happened. but here is a guy they say, could you please be a judge? come on, they line up to be a judge. it's horrible. we don't want judges. we want security on the border. we don't want people coming in. we want them to come in through a legal process like everybody else, that is waiting to come in to our country. [cheers and applause] and it got so crazy, that all of these thousands, we now have thousands of judges, border judges. thousands and thousands, and by the way, when we released people, they never come back to the judge anyway. they're gone. they're in your system. that's it. if they're good, that's great. if they're bad, you will have killings, you have murders, you have this, you will have crime, you will have crime. and remember, these countries that we give tremendous foreign

aid to in many cases, they send these people up and they're not sending their finest. does that sound familiar? remember i made that speech, badly criticized. what is so terrible what he said. turned out i was 100% right. that is why i got elected. [cheers and applause] we want a great country. we want a country with heart. but when people come up, they have to know they can't get in. otherwise it will never going to stop, whether it was president bush, president obama, president clinton, same policies. they can't get them changed because both sides are always fighting. this is maybe a great chance to have a change. but one of them says, we want to hire 5000 more judges. i don't want judges. i want border security. i don't want to try people.

i dope -- don't want to try people. i don't want people coming in. if a person comes in, it is essentially welcome to america, welcome to our country, you never get them out. they take their name, they bring the name down, they file it. then they let the person go. they show show back up to court one year from now. one from now. one year. but here's the thing. that in itself is ridiculous. 3% come back. the other thing they have is they have professional lawyers. some are for good, others are do-gooders and others are bad people. they tell these people exactly what they have to say. say the following. they write it down. i am being harmed in my country appeared my country is extremely dangerous. i fear for my life.

congratulations, you'll never be free of your these are given to them by lawyers who are waiting to are waiting to come up here that they are all bad people. they are impractical people. but in a way, that is cheating because they are not coming up for that reason here they are coming up for many reasons and sometimes by reason. there's been a 1700% increase in silent claims over the last 10 years. think of that. we are a great country, you can't do that. smugglers know how the system works. they game the system. it is so easy for them. they didn't go to the wharton school of finance. but you know what, they're really smart. the united states has just surpassed germany is having the

most asylum seekers of any nation on earth. can you imagine that? germany, we talked about germany. by the way, their crime from the time they started is up more than 10% and one of the reasons about that level is because they don't read like -- like reporting that kind of crime. but their crime is up more than 10% since they started. i heard somebody say "crooked hillary" clinton was questioning that statistic. she said it's not true. it's not true. didn't share to have her chance? [laughter] [applause] i'll tell you what, when you read the ig report with these really dishonest people and that was never a deep state guy appeared let me tell you, we've got some bad people that are doing bad things.

but when you read that ig report about how she got away with what she got away with, it's a disgrace. it's a total disgrace. [applause] you want to see the hearings right now on television, the folks are going on to the mainstream fake news media they want to focus on immigration because they want to keep the cameras away from the hearings. those hearings are not good for them. in fact, they are a disaster for them. the whole thing is a scam. it is a scam. and what has happened is a disgrace. so we have a house that is getting ready to finalize an immigration package that they are going to brief me on later and i'm going to make changes to. we might as well get it right or let's just keep it going.

but let's do it right. we want to solve this problem and family separation. i don't want children taken away from parents and when you prosecute the parents are coming in illegally which should happen we prosecute them for coming in illegally. that's not good. we want to end the border crisis by finally giving us the legal authorities to detain and remove illegal immigrant families altogether and bring them back to our country. we have to bring them back to their country. think of all that aid that we give some of these countries. hundreds of millions of dollars we gave to some of these countries and they send them out. well, i'm going to go very

assuredly for authorization that when countries abuse us by sending their people up, not their best, we are not going to give any more should those countries. [applause] so this is a responsible commonsense approach that all lawmakers should embrace. we need the democrats. people say you have the majority. in the senate, we have one, but you need 60. if we get 100%, we will be at 100. we will be at 51. so we need nine votes. we need 10, 12, 13. we have to have democrats support because we need to go not just the majority unfortunately, which we could get. we need to go's to 60. 60 out of 100. we need democrats support.

they don't want to give it because democrats love open borders. let the whole world come in. ms-13 gang members from all over the place. come on in. we have open borders. they view that possibly intelligently except that it's destroying our country. they view that as potential voters. someday they are going to vote for democrat. because they can't win on their policies, which are horrible. they found that out in the last presidential election. [applause] in fact, the roman policy with donald trump is a bad guy. he's a bad person. hundreds of millions of dollars of negative ads. nobody's ever been hit like that. i started disliking myself. proof.

i said man, am i that bad? the problem is they never told anybody what they're doing. they didn't talk about tax cuts by the way. they want to substantially increase your taxes. they didn't talk about crime. all they talked about was trump. he said will vote democrat. but what does he stand for? they say trump. i'm going with trump. here's what happens. tremendous democrats support. there was a beautiful night, dear dr., that was a beautiful night. [applause] that was some night. you have to stand for something and you have to stand for safety and security of our country. we can't let people poor and peered they've got to go through

the process and maybe it's politically correct or maybe it's not. we've got a stop separation of the family is. politically correct or not, we have a country that need security, that need safety, that has to be protected. [applause] so we are here today to talk about small business and the incredible progress we are making as a country. we really have made unbelievable progress and we are making it with the help and support of our wonderful friends at the nfib -- nfib. if i would've said these numbers during the campaign, the fake news would've said this is the most ridiculous. i would've said house. who would have known. things have kicked in better and

as an example use of the poll that was recently taken, small business poultry of the most optimistic and history of the poll. [applause] that is why i figured that this would be a friendly crowd. [applause] no one would've believed these numbers if i set it during the campaign. we created 354 million new jobs since election day. 3.4 million. think of what that means. and by the way, we do need people coming through the border. we do need people. and again, i have a lot of companies moving in. you look at fox con in wisconsin coming in. moving back into michigan. many car companies are coming

back into our country. many companies are coming back. they are coming back from where they went. now they are coming back because of all the things we've done with regulations for tax cutting. but we need people. we have the lowest unemployment rate. 320%. we need people. so we want people to come in, but they have to be people who can help us in those companies fulfill what they want to fulfill. [applause] unemployment claims are at a 44 year low. that is the great number. maybe the one that makes me happiest is this because i remember what go around and say what you have to lose. vote for me. the democrats have always been with you. vote for me. the most unsafe parts of the country. i would say to the

african-americans, i would say what he has to do? vote for me. what do you have to lose? unemployment for african-americans is at the lowest level in history. like what do you have to lose. [applause] i would go around and talk and some people would say don't say that. i'd say look, it is true. so badly treated and now the lowest level of unemployment in history for african-americans and for hispanic, the lowest level of unemployment in history and for women, the lowest level of unemployment in 21 years. soon it will be history. [applause] just like i promised during the

campaign are economic policy can be summed up in three very beautiful words. words that you know better than anybody in this country. jobs, jobs, jobs. [applause] and i shouldn't say this to the people in this room because you'll end up not having liked my speech. but wages for working people are finally after 22 years rising again in our country. i'm sorry to do that. [applause] the only thing you can hold against me, but i think you're also very happy about it. i know you will. according to the nfib's latest survey, the share of small businesses raising worker and

benefit pay has just set a new all-time high record. so it's a new all-time record. we've broken many records. i could go on and on. business optimism is the highest it's ever been in our country. more hard-working americans are able to support their family, contribute to their community and live the american dream. at the center of america's research inside the massive tax cut that republicans passed and that i signed into law six months ago this week. not one democrat voted for the tax cut than they are suffering now because they've got to lose a lot of races they thought they were going to win. i wish they had the vote to do over again. we have numerous states for senate where i think they'll be in big trouble. it's the biggest tax cut and reform in american history.

[applause] and you know the story. not since ronald reagan have they done any major tax cutting. they wanted to many times. i told the story all the time. cutting taxes should not be hard to sell. we are going to cut your taxes and you can't get it through. so the leadership came to my beautiful oval office. it is a beautiful office, great office. they talked about the tax reform. what is the word reform? does that mean you're going to raise taxes? what does it mean? no sir, with the tax reform act of 2017. i said no, i don't want to go reform. nobody knows what reforming knows what reform means. and then i look at all the times they try to pass tax cuts. they use the word tax reform. nobody knows what reform in. they want to know about tax cuts.

we are going to raise your taxes and take away your businesses because tax reform. we are going to take away tour firms. they don't want the word reform. they want the word tax cuts. sir, could you give us a name? i'll give you a name. it is called the tax cut cut cut bill of 2017. [cheers and applause] [applause]

[cheers and applause] that's a true story, right steve? such a true story. even i thought it was a little bit hokey with all the cut so we called a tax cut bill. they got the wd. and we got it passed. they give it, not one democrat vote at the heart of our planet is tremendous relief for working families and small businesses. a typical family of four earning $75,000 a year will see an income tax cut for more than $2000. in some cases much more than that, slashing their tax bill in half and more. [applause] we delivered an historic victory for american small businesses by allowing you to deduct 20% of your business income. people were shocked.

[applause] capital investment is soaring on small businesses and big as mrs. because you can now immediately deduct. this to me is the greatest of them all. every single penny spent on new capital equipment. one year deduction. [applause] i think that is going to be the star. as you know, we are, we are also bringing back trillions of dollars from offshore. companies were unable to do it from a tax standpoint. the amount they had to pay and more importantly it was just hard to do. you had to see the forms that had to be filled out. we have anywhere from 3 trillion to 5 trillion now it seems as though we are hitting the higher side. companies are pouring money back into our country, bringing it back from overseas, investing it

here. apple announced recently they will spend $350 billion on an incredible campus in new facilities all over the country. they are bringing money back like nobody ever thought before. [applause] when they said 350 billion, i said you made 350 million. 350 million bills a nice plant. i know how to build ahead of schedule and under budget. i can build a plant so when i heard william a city made 350 million, right? they said no. think of the total amount they are bringing back 230 billion they are putting in tremendous investment in our country. exxonmobil during the same thing in so many other countries doing the same thing different

numbers. it is incredible what happens. expensing, one year, expensing will be the star of overdoing. we examine that more small business owners from the alternative minimum tax about which you know very well was an enormous waste of your precious time and your hard-earned money. that was a disastrous tax. from now on, most small-business owners will be spared from the deeply unfair estate tax that i talked about and i'm so proud of that because you're all keeping your businesses. the family, farms keeping your business is. as a result of all of these taxes and all of these tax cuts, american businesses on a level playing field with your competitors from other countries who has so many advantages including subsidy by governments. you see what's happening with

china. this should've been done many years ago. china has been taking out $500 billion a year out of our country and rebuilding china. i always say we've rebuilt china. they've taken so much. it is time. we are going to get smart and do it right. we are getting a lot of support that we have to do something about it. maybe something happens where they agree it's been unfair for the last 25 years. but somehow that doesn't seem to work so easily. but we are going in we are going to make affair with other countries. both are friends and our enemies. i have to say in many cases our friends on trade have treated us much worse than our enemies. pretty amazing, isn't it? when the rules are fair and you

can compete, you will win against anyone anywhere in the world. but you have to bring it down to a level playing field. more than 6 million workers. [applause] have also received a bonus for a pay raise retirement account contribution for a new job thanks to these tax cuts. a lot of new jobs and people are able to go around and look for jobs. they hate to wake up in the morning. they don't want to go to work. now they've got the choice they have jobs that they can look and they can live. if you don't love it, you're not going to be good at it. millions of americans are now saying angrily saying to everybody that they are saving money on their money utility

bills. as a result of her business tax cuts, over 100 utility companies have lowered their prices, saving americans an additional $3 billion a year. [applause] are historic tax cuts also attended one of the most unfair taxes imaginable. obama cares individual mandate. [applause] government will no longer punish you if you cannot go further obamacare skyhigh premiums. think of this. you pay a lot of money to the government in order not to have to buy health insurance. you are paid money. it's a penalty. incredibly it was allowed. you are paying money so you don't have to buy health care.

that was a beauty. it's over, it gone, it's done. [applause] we actually thought we had the votes and one man early in the morning but thumbs down, but we almost got rid of obamacare without him. there was a very sad day for the republican party. a very sad day for the country when that vote was cast. thumbs down. i remember well. obamacare has been especially brutal for small businesses. you know that better than anybody. because premiums and deductibles to ask load and health care options to plummet. as a result of obamacare, many small businesses, sole proprietors have no good or affordable options. but now they do because we are opening up her system.

i am proud to announce another truly historic step in our efforts to rescue americans from obamacare and the obamacare nightmare and provide high quality affordable health care to every american. this is the low-cost great health care. you know, before obamacare there were many people very happy. they had no problem. but then you got thrown to the wind. alex acosta is here. this is so important. secretary of labor. [applause] alex in the department of labor are taking a major action that's been worked on for four months now and now it's ready to make it easier for small business is

to band together to negotiate lower prices for health insurance and escape some of obama cares most burdensome mandate through association health plans. [applause] [cheers and applause] you are going to save massive amounts of money and have much better health care. it's going to cost you much less. it's going to be fantastic and it's very comprehensive. i will tell you a lot of people,

big percentages of this country are going to be doing. while you're in a room together, form an association, good luck. the bigger the associations a better deal you're going to make. you're going to save a fortune and nobility give yourselves and your employees tremendous health care. i'm really honored by that. believe me. with this action, businesses in the same state or businesses in the same industry, not just the same state come anywhere in the country. i used to say during the debates cross state lines or you can negotiate. you now can cross state lines so you can negotiate. [applause] so if 20 or 30 of the businesses of this room get-together is a

group, an association, you pick the meanest, most vicious manager owner -- right? to negotiate your health care. and i know a few of the people in here that can do very well. you will end up with better insurance for less money. you will end up so great. that's not a bad answer. today. [applause] standup, alex. [cheers and applause] i call her secretary of labor and i say sir, he's very busy. i said wait a minute, and

president of the united states. they said he is working on health care. i said wow, department of labor that's interesting. that is some great plan. we love it. thank you very much, alex. very committed to it. we are now working on an expansion of that including even larger groups of people. something very exciting. for the first time ever, sole proprietors will come together in by a lower cost group insurance instead of getting ripped off by this disaster that we all know as obamacare. these actions will result in very low prices. much no choice. much more freedom including in many cases new opportunities to purchase health insurance. you'll be a will to state lines. i would say alex, i want to cross state lines. he said don't worry about it. you know, this is something we

were able to do within the confines of the existing laws. a fantastic thing. all set to go. get going. make your deal. [applause] and insurance companies and some people are forming around, but the insurance companies are so excited about this. they've made so much money off of obamacare. take a look at what happened to premiums. everyone hears about obamacare being a disaster except for the insurance companies. they have to give a little bit about money back. negotiate tough, please. every american who owns a small business plays a vital role in creating the -- [inaudible]

[inaudible] into the most incredible republic in the history of humankind. i don't say mankind anymore. i say humankind. do the women and? they want me to be politically correct. a couple of women have their thumb out. you like that, okay, now i'm happy about it. it is the same spirit that inspired previous generations to pass the claims and to build shining cities that touch the sky. we stand on the shoulders of american patriots who build the great highways and railroads, who dug out the panama canal,

who won two world wars and put a man on the face of the moon. you see what i did yesterday with nasa, right? you see the air force and now you will soon have the space force because that's where that. space. will be the leader. to gather there is nothing americans can do because we are one people and one family saluting one great american flag. [applause]

thank you. our future has never looked brighter and that is because of the hard working americans like you and millions of small business owners who took the chance to do what they love, to follow their heart and to chase their very beautiful dreams. you are the ones who are shaping our industry. you are the ones who are shaping and restoring our prosperity. we are restoring our prosperity. ec gdp. using my projections are. who knows. numbers no one ever thought possible. i look so forward to seeing some of those numbers. but you see what projections are. people are project team members like nobody, like a win and set

jobs, growth. let's see what happens. but we are doing well as a country and you are the ones truly who are making america great again. the happy anniversary. god bless you and god bless the united states of america. thank you very much. [applause] train to the president hitting on all of the key issues. this is his groove, his sweet spot to be dealing with anything economic it was a group who likes what he's done on the economy. the president speaking for the national federation of independent businesses. these are largely small and medium-sized businesses who have benefited appreciably from the cutting regulations for. the president to sort of paved the way for the tax cuts also very, very big beneficiaries. he did address the issue of kids being ripped from their parents. he said this is something that really stirred up with the

democrats, which is technically not true, but he says he wants to get outside and the democrats and republicans together to hammer out an agreement that would be acceptable. he's invited any and all to come forward and do that. they largely republican measures although the moderate measures supported by speaker paul ryan in which he says there should be an ability to find common ground. but so far that seems to include this whole process here. a little early, buddy. a big thing in the tao of 361 points. any sort of a deal with china has threatened china is going to follow up with the $200 billion of additional tariffs, traditional chinese goods. it's up again by another $200 billion also set out a reminder to canadians that they

are playing fast and less. i do want to correct a fact check in with the president said about not including timber and oil when it comes to how we compute these numbers in the trade surplus that we enjoy with canada. we do include timber and oil into that. but there might be some confusion as the services part which brings the $5 million merchandise gap to one that is 3 billion in our favor when you include services. we do include timber. we do include oil. we do include mineral services. just want to get that out there. delayed from former deputy assistant, president bush 43 broad lakeman and daniel maclachlan. danielle, and the immigration tommy said you want to pounce on that right away since it is something waiting on him and obviously great deal of concern i'm sure he has for republicans as well. i forgot to the table.

we have plans to come to the table. what to make about? >> immigration has been historically difficult issue for democrats and republicans to come around. a comprehensive immigration bill we didn't get done under president obama. i think this is going to be a political issue in the president will have a hard time getting past the news cycle. we see things come and go, issues come and go, but the idea of children being separated from their parents commit policy entirely down to jeff sessions and ultimately donald trump. she's going to have a problem if they send out to make sure these families come together shows you a little bit about the understanding within the gop and how this affects them in in the 2018 midterms. >> the president said the system mean that this provision, not separating children, be dealing with children and their parents does go back to 1997 when

clinton was president. this has nothing forcibly separating from their parents. it's parents. it's on the books that he said. jeff sessions took this leap, but it proven to be a very bad pr leap. what do you think the fallout is? >> i think the follow can be great this november. but it can be avoided. the president needs to step up the plate and identify the problem. we all know what the problem, but it's a comprehensive problem not just for children, but a problem of immigration whether its chain migration, whether it's lottery, unsecure borders, we need comprehensive immigration reform. not just a bill to take care of this problem. there are many more problems that need to be dealt with that are much more serious to our security. here's what i say. the president needs to call

leaders together to leaders together, bipartisan, chairman of the committee and the white house. if it takes days, it takes days. it takes a month, it takes a month. everyday the president should be hammering the leadership because the answers are in congress. neil: it's a lot closer than people think. democrats and republicans can come together on this. we will have more after this. hi, i'm joan lunden with a place for mom,

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together we'll make the right choice. train to the chinese are blinking on trade, but it looks like possibly the canadians are. canada's foreign affairs or her, eland. you know, they're certainly goodwill to modernize mass that could evolve. the time the president playing hardball with the chinese. $50 million worth of tariffs on chinese goods. china is quickly respond with $50 billion for the tariffs on unnamed american goods. the president was so peeved about that but he said you know

what, 200 billion on some unnamed goods in tariffs and a player from another team. i'm just kidding there. the chinese that they're considering that said if you think about, 200 billion on top of that, which would remaster virtually the entire trade gap with china, which would mean every good coming from china would be subject to send u.s. terrorists are not extreme case. to read right now for the most return of global economics editor, fox news contributor from all around genius, jon hilsenrath. would you make of this? it's like dating, bang, bang, crazy. >> on the china front we're at an important crossroads right here because of the president did with his first 50 billion tariffs ventilate american consumers. it was mostly industrial products he was going after. you were in a position with a chinese or american companies were observing that in their profit margin. if you can go to 200 billion

certainly if he goes to 400 billion, this will hit the core of what americans consumed from the chinese. iphone products, computers, clothing, toys, books, you name it, we import so much from china. he put the 10% tariffs on it it will hit american pocketbooks. the president will discover if he does this just how far he can take this trade battle with the chinese if american consumers revolt is not going to be able to push it so hard. if they absorb that and expect that come he's really got the chinese in the corner because they depend so much on driving their economy through exports to america. neil: maybe that is the position of which he eluded obviously with business folks in washington. one of the things we've always echoed in you and i chat about this quite a bit of the world needs us in all these countries

made us a heck of a lot more than we need them, particularly china. charlie brady, our stocks at either the study and a phenomenon i didn't know since all of this tussle began around the beginning of march. the chinese markets have tumbled 11% or 12%. we are up a little bit since then with all of that. you could make an argument that there were known to us that we are to them. what do you think of that? >> you can make an argument of the president has argued united dates killed as a trade war. on a global basis i don't know if i would agree with that. neil: i think that's a very risky urgent strategy there. >> it is. when it comes to the chinese government attorneys are asking themselves what can we do to retaliate? we don't sell so much stuff to them that they can up the tariffs that they put on an

agricultural products or airplanes, but they don't have as big of a list to choose from as we do. the next step for them if they start making life difficult for american multinational companies doing business in china that we find out they start feeling health inspections or food inspections. neil: you are already seeing some signs of worry reflected in shareholders, the issue down 3%. even the semiconductor makers to get most of their revenues from that neck of the woods. so there is a sense that maybe that is where they see the soft spot for americans. i'm wondering whether they ever hit the "nuclear option" and that is start selling our debt. >> you know, i think that's a really difficult proposition for them. if the seller., that means basically that got us there is

following dollars that weakens the u.s. currency and strengthens them. again, their trade surplus is premised in part on having this currency advantage. they end up shooting themselves in the foot if they get rid of u.s. bonds. interest rates are very low right now. a lot of buyers elsewhere in the world. i don't know if it's a winning proposition for them. chinese don't have a lot of great options in this environment. neil: we got news that russia is slowly unwinding a lot of its position and i don't think they're a very big player, but as if to say, hey, we can all t-tango here. >> the other point i should make is the chinese are in is that a moment when their own economy is slowing down. they had debt bubble they've been trained to unwind the bar when they did to keep their economy growing. they're not in a great position

to get a trade war with our largest customer at a time when growth is slowing down. you think about the chinese and the communist party in china. their primary objective is economic and social stability. they value that more than anything. they don't want their economy to slow down because the weeds to social unrest. neil: cooler rational heads prevail here, but china could take a likeness. >> you mentioned canada at the outset. he's got a real advantage in the situation with the chinese. canada and mexico is a little more complicated. as you said earlier correctly we are running a trade surplus with canadians at the account service in that. we sell a lot of agricultural goods to mexico. and also a lot of supply chains in the auto are tied to mexico

and canada. we discover it's hard to tariff nafta walk away. we might have more of an advantage than they do with canada and mexico. >> that's interesting. i never looked at it that way. thank you very much. good seeing you again. a former top obama official on what he makes of what's going on here and missed opportunities here. board president hu seems to be so far keeping his pledges will not flooding the market out of control. more after this.

neil: you know it's been remarkable this whole trade for tat did the president enjoys more support from prominent democrats than it is republicans, many afraid in the latter to call him out on this despite concerns about free trade been compromised. i wanted it to read on that from jason furman. the council of economic advisers. very good to have you back with us. i can remember a devil of a time you guys had with the transpacific ownership of the

lakes of senator warren and senator wyden, two very prominent liberals, both not keen on a trade deal that compromise do. now it's happening in reverse. >> thanks for having me on your show when trade is an issue that definitely cut across party lines. i think there's a red economic answer is very clear, which is that expanded trade can be really good for our economy. our economy is very dependent on trade and when you try to limit it in a haphazard way, that's a minus for us, not a plus. president obama is trying to extend trade. the ones president trump keeps complaining about unfortunately. we still have those terrorists. neil: had that not happened, that would not have been. >> tpp would've had zero milk tariffs in canada would be treating us even more fairly. >> the presidency is a think

canadians are sneaky and pulled some fast ones on this. i understand the numbers were the overall average tariff is not that severe in 4.5% versus 3.5% here. there were isolated instances. where do you make of this is going because now we are putting the ball in china's court that if they even think of doing more it is going to up the ante if canadians say the wrong word it will up the ante. >> that's a great question, neil. i wish i knew the answer as to where we were going. china has a set of legitimate issues around intellectual property and disparate treatment. >> a good column i remember when the president first took over. the first president to go to china and they were trying to

pull some fast ones. >> one thing we were successful on was currency. the chinese currency appreciate it a lot set would push them very hard on. they definitely were and are not anymore. neil: they're not anymore or not doing as much. >> they manage it in both directions to prevent volatility although they could go back to fixing it. if they want to keep the trade surplus with the united states to matter what they do on terrorists. they went from 10% of gdp to 125% of gdp. it came way, way down on the overall balance that made a lot of progress. we did not make a lot of progress on the ip theft issues and that which is going to take more time, continue to win cases and the wto like we continue to put pressure on them and isolate them for tpp. >> you did have remarkable

success with the world trade organization. this president not so keen on mid-level referees. it's america, we don't do that. what you make of that approach? >> the economic report of the president discussed the statistics that the u.s. has been very successful in the wto. china has been unsuccessful in the wto. a lot of what they do is restrain unfair trade practices by china. that's the only way to win here. the united states does not have enough leverage by itself to win a trade war. it can only win it together with allies, together with an international set of rules on our side. neil: when the president talks about the economy, how do you feel about that? >> first of all, he is doing great. the unemployment rate is great.

wages are still disappointing. that's one thing that's actually gotten worse over the past year relative to what was before. 90% of this is the momentum that the economy has that the global economy is strengthening, but certainly $200 billion of fiscal stimulus will help the economy in the short run. i just don't think it's going to do a whole lot in the medium and long run. neil: you'd be surprised of the term people disagree. i wish i could get you back for more discussion with all the breaking news. we will be back with more after all of this. the dow down about 3.5%.

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neil: all right. still down over 300 points on the dow. i tried trish regan. that is as good as i could get it for. >> all right. you will have to work a little harder. neil: i know. i know. trish: neil cavuto, thank you very much. with very a market down significantly, down 304. wall street reacting to the news around the tariffs and all the threats going back and forth between the u.s. and china. i'm trish regan. welcome, everyone, to "the intelligence report." ♪ trish: we have global markets in a big selloff mode on news president trump is pushing for 200 billion-dollars more tariffs against china. chinese stocks are getting particularly hard. the sh